Skip to main content

Tag: bankruptcy

Bankruptcy

Top 5 Bankruptcy Myths

Written by Alex Swindells on . Posted in Bankruptcy, Debt help.

Updated for 2026

If you have been struggling with debt and looking for a way out, bankruptcy might have crossed your mind. But there is a lot of misinformation out there, and it can be hard to separate fact from fiction. In this guide, we break down five of the most common bankruptcy myths so you can make a more informed decision about your finances.

What is bankruptcy?

Bankruptcy is a legal process that can give you a fresh start if you are unable to repay your debts. You can apply for your own bankruptcy regardless of how much you owe. If a creditor wants to make you bankrupt, your debt must exceed £5,000.

Applying for bankruptcy costs £680. Once you are declared bankrupt, an official receiver or insolvency practitioner will look at your finances. Some of your assets may be sold and the money shared between your creditors.

After 12 months, your bankruptcy will usually be discharged, meaning you are released from most of the debts included in it, provided you have met the conditions set out by the official receiver.

If you are weighing up your options, our guide on IVA vs bankruptcy can help you compare the two.

Myth 1: everyone will find out I went bankrupt

When you are made bankrupt, it does become public information. Your details will appear on two government registers: the Gazette and the Individual Insolvency Register.

That said, unless your case is high profile, it is very unlikely that your bankruptcy will be reported in local newspapers or online media. Someone would need to actively search for your name on these registers to find out, and most people simply do not do that.

Your bankruptcy entry is also removed from the Individual Insolvency Register once you are discharged, which is typically after 12 months.

Myth 2: you will definitely lose your job

This is one of the biggest concerns people have, and understandably so. The good news is that for the vast majority of jobs, bankruptcy will not affect your employment.

There are some exceptions. If you work in financial services, law enforcement, or certain regulated professions, your role could be affected. You might not lose your job outright, but your duties could change. It is worth reading through your employment contract carefully to understand any restrictions.

In most cases, you are not legally required to tell your employer. If you are unsure, speak to your employer or seek independent advice. If your employer does take action against you, make sure it is lawful. You may be able to challenge any unfair dismissal.

For more on what to expect before filing, take a look at our guide to 5 things to know before declaring bankruptcy.

Myth 3: you will lose everything you own

This is probably the most common myth of all. Going bankrupt does not mean you will lose every possession.

Certain items are protected. You are allowed to keep:

  • Household essentials like furniture, bedding, and kitchen appliances
  • Clothing and personal items for you and your family
  • Tools of the trade, which are items you need for work, such as a vehicle, books, or equipment

Your home could be at risk if you own property, but even then there are protections in place. The official receiver will consider your circumstances, and in some cases your interest in the property may be dealt with after the bankruptcy period ends.

If your main concern is protecting your assets, it is worth comparing your options. A different approach to managing your debt might suit your situation better.

Myth 4: you will never be able to get credit again

Bankruptcy does have a significant impact on your credit file, but it is not permanent. Your bankruptcy will stay on your credit report for six years from the date of the order. During that time, you may find it harder to access credit, and some lenders will decline your applications.

However, there are steps you can take to rebuild your credit score over time:

  • Make sure you are on the electoral register
  • Pay all bills and commitments on time
  • Consider a credit builder card and use it responsibly
  • Check your credit report regularly for errors

Many people are surprised at how quickly their score can improve once the bankruptcy is discharged. For more practical tips, read our guide on common causes of a decreased credit score and how to avoid them.

Myth 5: bankruptcy wipes out every type of debt

Most unsecured debts are included in bankruptcy and will be written off when you are discharged. These include things like credit cards, personal loans, council tax arrears, and utility bill debts.

But not all debts are covered. The following types of debt will survive your bankruptcy, and you will still be responsible for paying them:

  • Student loans
  • Court fines
  • Child maintenance and family court orders
  • Debts obtained through fraud
  • Personal injury compensation
  • Any debts you take on after the bankruptcy order is made

If you are unsure which of your debts could be included, our guide to which debts can be included in debt solutions is a good starting point.

Is bankruptcy the right option for you?

Bankruptcy is a serious step, but for some people it is the best route to becoming debt free. It is not the only option, though. Depending on your circumstances, an IVA, a Debt Relief Order, or a debt management plan might be more suitable.

The most important thing is to get proper advice before making any decision. Swift Debt Help can talk you through your options and help you find the right path forward.

Request a Debt Assessment

Disclaimer: This article is for general information purposes only and does not constitute financial advice. Financial information entered must be accurate and would require verification. Your individual circumstances will influence the most suitable debt solution for you.

Ready to Find Out if You Qualify for Help?

Use our Solution Finder for a free, no-obligation assessment. Our team can help you understand your options and take the first step towards a debt-free future.

Get Help Today

Five and twenty pound notes laid out on table

How To Pay Off Debt When You Are Unemployed

Written by Alex Swindells on . Posted in Debt help, Bankruptcy, IVA.

Updated for 2026

Losing your job is stressful enough without the added pressure of dealing with debt. When the income stops but the bills keep coming, it can feel like there is no way out, especially if you already owe money on credit cards, loans or overdrafts.

The good news is that you do have options. Whether you need short-term breathing room or a longer-term debt solution, there are steps you can take right now to protect yourself and start getting back on track.

Practical Steps to Reduce Your Debt While Unemployed

Before looking at formal debt solutions, there are some straightforward things you can do to limit the damage and keep your finances under control.

Contact Your Creditors Straight Away

Get in touch with your creditors as soon as possible to explain that you have lost your job. Many lenders will offer temporary relief, such as reduced payments or a short payment holiday, on the understanding that you will resume full payments once you are back in work.

Being upfront about your situation is always better than ignoring letters and phone calls. Creditors are more likely to work with you if you communicate early.

Stop Using Credit

It can be tempting to rely on credit cards or overdrafts to cover everyday costs, but this only increases the total amount you owe. If possible, avoid using any form of credit while you are out of work.

Do not be tempted to increase your credit card limit or overdraft either. The short-term relief is not worth the long-term cost, particularly once interest starts building up.

Create a Strict Budget

Go through your outgoings and strip back to essentials only. Cancel subscriptions you do not need, switch to cheaper alternatives where you can, and focus on keeping up with priority bills like rent, utility bills and council tax.

If you have any money left over after covering the basics, put it towards your highest-interest debt first.

Stay Away from Payday Loans

Taking on more debt when you have no income is a recipe for trouble. Payday loans carry extremely high interest rates and can quickly spiral out of control. If you are struggling, look at the formal debt solutions below rather than borrowing more.

Check Your Benefits Entitlement

If you are not already claiming, make sure you check what you are entitled to. Universal Credit, Jobseeker’s Allowance and other support can provide a lifeline while you search for new employment. The GOV.UK benefits calculator can help you work out what you could claim.

Debt Solutions Available When You Are Unemployed

If your debts have become unmanageable, there are several formal options that could help. Each one works differently, so the right choice depends on your circumstances, including how much you owe and what assets you have.

Breathing Space Scheme

If you live in England or Wales, the Government’s Breathing Space scheme gives you temporary protection from your creditors for up to 60 days. During this period:

  • Creditors cannot chase you for payments
  • No enforcement action can be taken against you
  • Interest and charges on your debts are frozen

You will still be responsible for repaying your debts once the 60 days are up, but this window gives you time to get proper debt advice and explore your options. To apply, speak to a debt adviser who can check your eligibility and submit an application on your behalf through the MoneyHelper website.

Debt Relief Order (DRO)

A DRO puts your debts on hold for 12 months. If your situation has not improved by the end of that period, any qualifying debts are written off entirely.

To qualify for a DRO, you must:

  • Owe no more than £50,000 in total
  • Have less than £75 per month left over after paying essential living costs
  • Not be a homeowner
  • Live in England, Wales or Northern Ireland

While a DRO is in place, your creditors cannot take legal action against you. This can be a particularly good option if you are unemployed with very little disposable income. You can read more about which debts can be included in a DRO.

Bear in mind that if you find work during the 12-month period and your disposable income rises above £75 per month, you may need to look at an alternative solution.

Woman paying with card via her phone

Bankruptcy

Bankruptcy is a legal process that can clear most of your debts, but it does come with significant consequences. Your valuable assets (not including everyday essentials like clothing and furniture, or tools needed for work) may be sold to repay creditors.

You can apply for bankruptcy regardless of how much you owe. The application fee is £680, paid to the Insolvency Service.

Once declared bankrupt:

  • Creditors can no longer pursue you for the debts included
  • Your bankruptcy will appear on the Individual Insolvency Register and in The Gazette
  • It will stay on your credit file for six years
  • You will need to follow certain restrictions, usually for 12 months

If you are on benefits with no other income, you will not normally be asked to make monthly contributions. However, if you find employment during the bankruptcy period, contributions may be required. For more detail, read our guide on things to know before declaring bankruptcy.

Debt Management Plan (DMP)

A DMP is an informal arrangement where a third-party provider negotiates reduced monthly payments with your creditors on your behalf. You will still repay the full amount owed, but at a pace you can actually afford.

The key advantages of a DMP include:

  • Payments are based on what you can realistically afford
  • The plan is flexible and can be adjusted if your circumstances change
  • It covers unsecured debts such as credit cards, personal loans and overdrafts

A DMP is not a legally binding agreement, which means creditors are not obliged to accept it. That said, most creditors will cooperate with a reasonable payment proposal. The plan ends once all debts are cleared in full.

Using a calculator for debt management

Individual Voluntary Arrangement (IVA)

An IVA is a legally binding agreement set up through a licensed Insolvency Practitioner (IP). Your IP will assess your income and essential outgoings, then propose a monthly payment amount to your creditors.

If your creditors accept the proposal, you make the agreed payments for a set period, typically five to six years. At the end, any remaining qualifying debt is written off.

For someone who is currently unemployed, an IVA may still be an option depending on your overall financial picture. If you find work during the arrangement and your income increases, your IP will reassess your payments accordingly. You can check whether you qualify for an IVA here.

How Debt Can Affect Your Mental Health

Being unemployed and in debt at the same time takes a serious toll on your wellbeing. If you are feeling overwhelmed, you are not alone, and there is support available. Our article on how debt affects your mental health covers this in more detail, along with where to get help.

Get Free Debt Advice Today

If you are unemployed and struggling with debt, the most important thing you can do is get advice as early as possible. The longer you leave it, the harder it becomes to resolve.

Use our solution finder to see which debt solution might be right for your situation, or get in touch with Swift Debt Help directly. One of the team will talk through your options with no obligation.

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

4 Alternative Solutions If Your IVA Is Rejected

Written by Alex Swindells on . Posted in Bankruptcy, Debt help, IVA.

What Happens If Your IVA Is Rejected?

Updated for 2026

Having your Individual Voluntary Arrangement (IVA) rejected can feel like a setback, but it is not the end of the road. There are several alternative debt solutions available to you in 2026, each with their own benefits and drawbacks. This guide walks you through four realistic options so you can make an informed decision about your next steps.

Why Would an IVA Be Rejected?

An IVA needs approval from creditors who hold at least 75% of your total debt value. If they feel the proposed repayment amount is too low, or if there are concerns about your financial disclosure, they may vote against it. Your Insolvency Practitioner (IP) can sometimes put forward a revised proposal, but if that also fails, you will need to consider other routes.

It is worth knowing that a rejected IVA does not make your debts disappear. Your creditors can still pursue you for the full amount, so acting quickly to find an alternative is important.

1. Debt Consolidation Loan

A debt consolidation loan lets you combine multiple debts into a single monthly repayment, often at a lower interest rate than your existing credit agreements.

Advantages

  • One monthly payment instead of juggling several creditors
  • Potentially lower interest rate, reducing the total cost of borrowing
  • Once your original debts are cleared, creditors can no longer chase you for those balances
  • Fixed repayment term gives you a clear end date

Disadvantages

  • You will need a reasonable credit score to qualify, so this may not be an option if your credit history is poor
  • Secured loans put your home at risk if you cannot keep up repayments
  • There may be arrangement fees or early repayment charges on your existing debts
  • It does not reduce the total amount you owe

If you are considering this route, MoneyHelper has a useful guide on debt consolidation that covers the key things to watch out for.

2. Debt Management Plan (DMP)

A Debt Management Plan is an informal agreement where a third-party provider negotiates reduced monthly payments with your creditors on your behalf. Unlike an IVA, it is not legally binding.

Advantages

  • Straightforward to set up, with no court involvement
  • You repay what you can genuinely afford each month
  • Free DMP providers such as StepChange exist, so you do not have to pay for the service
  • Flexible: you can increase payments or settle early if your circumstances improve

Disadvantages

  • Your creditors are not legally obliged to stick to the arrangement and could still pursue legal action
  • Interest and charges may continue to be added unless your creditors agree to freeze them
  • It can take significantly longer to clear your debts compared to formal solutions
  • Your credit rating will still be affected

3. Bankruptcy

Bankruptcy is a formal legal process that can write off most of your unsecured debts. In 2026, you can apply for bankruptcy online through the GOV.UK bankruptcy service. The application fee is currently £680.

Advantages

  • Most unsecured debts are written off entirely
  • Creditors must stop all enforcement action against you once a bankruptcy order is made
  • You are typically discharged after 12 months, giving you a fresh financial start
  • Pressure from debt collectors and threatening letters stops

Disadvantages

  • Your assets, including your home, may be sold to repay creditors
  • Your bankruptcy is publicly recorded on the Insolvency Register and published in The London Gazette
  • If you own or run a business, it could be sold or closed
  • Certain professions have restrictions on people who have been made bankrupt
  • It stays on your credit file for six years

Bankruptcy is a serious step, but for people with no realistic way of repaying their debts, it can provide genuine relief. You can compare it directly with an IVA in our guide to IVA vs Bankruptcy.

4. Debt Relief Order (DRO)

A Debt Relief Order is designed for people with lower levels of debt who have minimal assets and limited spare income. The rules were updated significantly in 2024, making DROs accessible to far more people.

Key Changes for 2026

  • The debt threshold was raised from £30,000 to £50,000 in June 2024, meaning you can now include substantially more debt
  • The DRO application fee was abolished in April 2024, so applying is now completely free
  • The surplus income limit remains at £75 per month

Advantages

  • No application fee: it costs nothing to apply
  • Interest and charges on your debts are frozen for 12 months
  • Creditors cannot take legal action against you during the moratorium period
  • After 12 months, your qualifying debts are written off entirely

Disadvantages

  • Strict eligibility criteria: your total debts must not exceed £50,000, your assets must be worth less than £2,000, and your surplus monthly income must be under £75
  • You cannot be a homeowner
  • It is recorded on the Insolvency Register and your credit file for six years
  • You can only apply through an approved intermediary, not directly

For a detailed comparison, read our article on DRO vs IVA.

Which Option Is Right for You?

The best alternative depends entirely on your personal circumstances: how much you owe, whether you own property, your monthly income, and how quickly you want to become debt-free.

Here is a quick comparison:

  • If you have a decent credit score and want to simplify payments: a debt consolidation loan may work
  • If you want flexibility without legal commitment: a Debt Management Plan is worth exploring
  • If your debts are unmanageable and you need a complete fresh start: bankruptcy could be the answer
  • If you owe less than £50,000 with minimal assets and income: a Debt Relief Order is now free and could write off everything

Whatever you decide, getting professional advice early makes a real difference. Free, impartial guidance is available from StepChange and MoneyHelper.

Disclaimer: This article is for general information only and does not constitute financial advice. Your circumstances are unique, and you should seek professional guidance before making any decisions about debt solutions. Information provided would require verification, and other factors will influence the most suitable option for you.

Need Help Finding the Right Debt Solution?

If your IVA has been rejected and you are unsure what to do next, get in touch for a free, no-obligation assessment. We can help you understand which debt solution fits your situation.

Request a Free Debt Assessment

Woman at computer on tablet

5 Things To Know Before Declaring Bankruptcy

Written by Alex Swindells on . Posted in Bankruptcy, Debt help.

Updated for 2026

Declaring bankruptcy could be an option if you have mounting debts that you are unable to pay. However, bankruptcy is not something you should rush into because it has long-term effects on your life and your finances. Here are five things you should know before declaring bankruptcy in 2026.

1. Declaring bankruptcy can have an impact on your assets

Hand drawing of man in shirt and tie losing his assets to bankruptcy

When you declare bankruptcy, you are generally required to make a reasonable effort to pay back your debts, and this often includes using your assets. Things that are considered essentials, like clothes, furniture, and cooking appliances are typically protected. However, other belongings may be passed on to the Official Receiver, the person that deals with your bankruptcy. These could then be sold to raise money to pay your debts.

Items that you may be allowed to keep include:

  • Clothes
  • Furniture
  • Household appliances
  • Tools required for your job
  • A car that you need for work or other basic needs (if you are disabled, for example)

There are some exemptions, and if certain assets on this list are valued very highly, they can still be sold. For example, you may be required to sell your car and given around £1,250 to buy a cheaper replacement, with the rest going towards your debts.

Jointly owned assets can also be affected. If they are sold, the money would typically be split between the Official Receiver and the person that has a shared interest in the asset.

Depending on your situation, you may have to move home when you declare bankruptcy. If you rent your home, you generally will not be affected and your landlord will not be informed. But if you own your home, you may be required to sell it to raise money to pay your debts. In some cases, you can prevent this.

The Official Receiver has three years to decide what to do with your home. If they have not taken steps to sell it in that time, your interest in it is restored and you can keep your home.

It is worth considering how your assets could be impacted before you declare bankruptcy.

2. If you own a business, bankruptcy will have an impact

Drawing of chart a declining chart with an arrow pointing downwards

When you declare bankruptcy, there are specific rules related to the running of a business. For the 12-month period of your bankruptcy, you are generally forbidden from acting as the director of a limited company or managing it in any way without the permission of the court. The company itself can continue to operate but you would need to appoint somebody else to manage it for you.

If you are self-employed and registered as a sole trader, the rules are different. You may be able to continue operating as normal, but if you run a business under a name that’s different to the one in which you were made bankrupt, you must tell everyone you do business with the name under which you were made bankrupt.

Bankruptcy will also be recorded on your credit reports for six years. This can seriously impact your ability to get credit in the future, which can be a big problem for businesses.

Business owners might want to explore other options like an Individual Voluntary Arrangement (IVA) or a Debt Management Plan to avoid the restrictions on their ability to run their company.

3. Your bank accounts could be frozen

Young woman feeling displeased about debt on her credit card while checking bank account over laptop at home.

The Official Receiver takes control of all of your assets, including your bank account, when you declare bankruptcy. This often means that your bank accounts are frozen and you cannot withdraw any money. If you have money in your account that is required to meet your essential living costs, the Official Receiver may arrange with the bank to release those funds to you. The bank will then decide if you can continue using your account.

4. Bankruptcy doesn’t cover all of your debts

Pound coins stacked on top of each other on a table

Writing off debt is one of the major benefits of bankruptcy but not all debts are covered. It is important to understand exactly which debts are not included because you will still be liable for them, even if you file for bankruptcy. Debts generally not covered include:

  • Secured debts
  • Child maintenance debts
  • Student loans
  • Court fines
  • Council tax debts (in some cases)

5. Take the right steps before declaring bankruptcy

Person wearing running shoes taking steps up the stairs

There are some key steps to consider when looking into bankruptcy to minimise the impact.

Consider whether bankruptcy is the right debt solution for you

Bankruptcy is not always the most suitable debt solution. It may be worth looking into options such as Debt Management Plans (DMP), Debt Relief Orders (DRO) or Individual Voluntary Arrangements (IVA) before declaring bankruptcy. As of 2026, DROs are available for debts up to £50,000, and the DRO application fee has been abolished, making them free to apply for. You may be able to limit the impact on your credit reports and avoid financial restrictions by finding a different debt solution.

Apply for bankruptcy

The next step is to fill out the necessary paperwork and pay the fee of £680. This can be paid in instalments, if necessary, with a minimum payment of £5. However, a bankruptcy order will not be granted until the fee is paid in full. You can find the application forms on the gov.uk website.

Set a budget for your living costs

As part of your bankruptcy application you will need to put together a budget based on your essential expenses. When you declare bankruptcy, you will generally not be permitted to spend beyond this, as all additional money will go towards your debts.

Cooperate with the Official Receiver

The Official Receiver is the person that manages your bankruptcy. They will typically contact you within two weeks of your application to discuss your bankruptcy. They also take control of your assets. You need to work with them while they distribute your money and assets to pay off a portion of your debts.

Pay back your debts and discharge from bankruptcy

Once everything is in place, you may need to continue paying towards your debts for up to 3 years. This depends on your circumstances and your disposable income after meeting your essential outgoings. As long as you cooperate with the Official Receiver and meet all of your obligations, you would typically be discharged from bankruptcy after 12 months.

Declaring bankruptcy could be one solution to your debt problems, but it is not always the only option. For general information about debt solutions, fill out the contact form below to get in touch with Swift Debt Help. This information is for general guidance only and should not be considered financial advice. Your individual circumstances may vary, so speaking with a qualified debt adviser is always recommended.

Request a Debt Assessment

May not be suitable in all circumstances, Fees may apply, your credit rating may be affected.

Disclaimer: This content is for general informational purposes only and does not constitute financial advice. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

Ready to Find Out if You Qualify for Help?

Use our Solution Finder for a free, no-obligation assessment. Our team can help you understand your options and take the first step towards a debt-free future.

Get Help Today
Pay debt sticky note

How To Clear Council Tax Debt

Written by Alex Swindells on . Posted in Debt help.

If you are struggling with council tax payments, knowing how to clear council tax debt is essential before the situation spirals. When you miss payments, you still owe the money to your local council on top of any future bills, so arrears can build up fast. There comes a point when the council will take action to collect what you owe, and if you fail to pay, there could be serious consequences, including criminal prosecution in some cases.

Fortunately, there are several ways to manage the situation and either clear the debt or have a portion of it written off so you can pay the rest. This guide outlines the options available to you in 2026 and will help you deal with council tax debt before it gets worse.

How to Clear Council Tax Debt: Understanding the Consequences

Row of credit cards

What Are the Consequences of Not Paying Council Tax?

Failing to pay your council tax debts can lead to serious consequences. The severity of the action your council takes depends on how much you owe and how long the debt has been outstanding. Potential consequences include:

  • A Liability Order being issued by the Magistrates’ Court
  • Enforcement agents (bailiffs) arriving at your home
  • Deductions taken directly from your wages or benefits
  • A charging order placed on your property
  • Prison sentences of up to three months for wilful refusal to pay

These are the most drastic outcomes, but you will be given options before these steps are taken. When you first miss a payment, the council will send you a reminder within two weeks. You will be given seven days to pay, and if you make the payment on time, no further action will be taken.

If you fail to pay after receiving a reminder, you will then receive a final notice. This gives you another seven days to pay. If this is your third missed payment within a year, you will get a final notice immediately without a reminder first.

Continued failure to pay will lead to more serious consequences. At this stage, the council may apply to the Magistrates’ Court for a Liability Order against you. This gives the council the right to use enforcement agents (bailiffs) who can take control of your goods to repay the debt. You will also have to pay the court costs, increasing your overall debt. You can avoid this if you settle the debt before your court date.

As well as sending bailiffs, the council can apply to take money directly from your wages (an Attachment of Earnings order) or from your benefits, including:

  • Universal Credit
  • Employment and Support Allowance
  • Pension Credit
  • Jobseeker’s Allowance
  • Income Support

These deductions happen automatically, and you cannot prevent them unless you find another way to pay. If the deductions make it difficult to cover other essential bills, you can discuss this with the council and they may agree to a reduced amount.

In certain circumstances, you can be sent to prison for not paying your council tax. If you are in genuine financial difficulty and there is no way you can afford to pay, it is very unlikely you will face a prison sentence. Courts treat this as a last resort. However, if you wilfully refuse to pay and the court decides you do not have a good reason, you can be imprisoned for up to three months.

A single missed payment can usually be dealt with easily, but if you are in a difficult financial position and you build up significant council tax arrears, the situation can quickly spiral. That is why taking action sooner rather than later is so important.

How to Deal With Council Tax Arrears

Person using ATM machine

1. Do not ignore your debt

The worst thing you can do is ignore your debt and hope it goes away, because it will not. When you miss a payment, contact the council immediately, before they have even sent you a reminder. There are options to help you manage your council tax bill and avoid further missed payments. The quicker you put measures in place, the easier it is to avoid council tax arrears.

Call your council and let them know you have missed the payment because you cannot afford it. Ask about payment holidays or payment plans. Many councils will give you a break from payments or agree to a reduced monthly payment if you cannot afford the full amount. This keeps you paying something, and because the council is aware of the situation, they are less likely to take further action against you.

There is also additional help available to you, and it is important to claim everything you are entitled to. We will discuss this in more detail below.

2. Figure out what you can repay

When you are already in arrears and cannot afford to repay the full amount, you should still offer to pay a percentage of the debt. By paying off a portion, you can delay further action and give yourself more time to get your finances in order. So, you need to figure out what you can realistically afford to repay. This is also important if you are trying to negotiate a reduced monthly payment with the council.

Make a detailed budget listing your income and all of your outgoings. Include small bills like subscriptions as well as your main utility bills. This will give you a clear picture of how much money you have left each month after covering all essential payments. You can then use this figure to make an offer to the council. When working out how much you can afford, make sure you have accounted for everything and do not put yourself in more financial difficulty by offering too much.

The aim is to pay off as much of the council tax debt as possible while maintaining your other financial responsibilities and avoiding further missed payments.

3. Apply for everything you are entitled to

You can apply for assistance if you are having difficulty with your council tax bills. As mentioned earlier, you can ask the council for a payment holiday or reduced payment plan. If you are on a low income, you can also apply for a Council Tax Reduction (CTR). This is a long-term reduction in your council tax bill so it becomes more affordable. Every council has their own process for applications and granting reductions, so you will need to get in touch with yours to find out the details. They usually consider the same factors when making their decision:

  • Your household income, including every adult in the household and all benefits you claim
  • Your circumstances, such as whether you rent or own the property, if you have children, etc.
  • The area you live in

You are not guaranteed to be granted a CTR, but you should always apply because it can make things far more manageable. Depending on your income, you may be entitled to up to 100% off your council tax.

Certain groups are exempt from council tax altogether, so check whether this applies to you. Exempt groups include:

  • Under 18s
  • Full-time students (including student nurses and certain apprentices)
  • People with a severe mental impairment
  • Live-in carers (as long as the person you care for is not a spouse, partner, or child under 18)
  • Diplomats
  • People receiving training funded by the Education and Skills Funding Agency (if under 25)

If you or somebody in your household falls into one of these categories, you may not have to pay council tax at all, or you may qualify for a partial reduction.

There are also income support programmes for people who are struggling financially. If you cannot afford your bills, check whether you are eligible for Universal Credit, Child Benefit, Child Tax Credit, and Housing Benefit, as well as a CTR.

Many people end up in council tax arrears simply because they have not claimed all of the financial help they are entitled to. With a bit of extra support, you may be able to avoid the situation entirely.

4. Consider the Breathing Space scheme

If you need time to get proper debt advice without the pressure of enforcement action, you may qualify for the government’s Breathing Space scheme (also known as a Debt Respite Scheme). This gives you legal protection from creditor action for up to 60 days. During this period, your council cannot send bailiffs, apply for deductions from your wages, or add interest and charges to your debt. You will need to contact a debt advice provider who can assess your eligibility and apply on your behalf.

5. Explore formal debt solutions like an IVA

Council tax arrears can quickly build up, and if you are unable to repay them, you may need to explore formal debt management solutions. An IVA (Individual Voluntary Arrangement) is one option for dealing with council tax debt alongside other debts you owe. You can find out more about what debts can be included in an IVA in our separate guide.

A licensed Insolvency Practitioner will assess your finances and determine how much you can afford to pay each month. They will then make an offer to your creditors and, in most cases, negotiate a portion of the debt to be written off. If your creditors agree to the IVA, you make monthly payments over a typical period of five to six years, after which any remaining qualifying debt is written off. During your IVA, you are also protected against further enforcement action, including bailiffs.

If your debts are smaller, a Debt Relief Order (DRO) may be a more suitable option. A DRO is designed for people with lower levels of debt who have very little disposable income and few assets.

Still Need Help With Council Tax Arrears?

If you are having difficulty with council tax arrears, Swift Debt Help can point you in the right direction. Our team will discuss different debt management solutions with you and guide you through the process, so you can work towards becoming debt free. Fill out the contact form below and we will get back to you soon.

This article is for general information purposes only and does not constitute financial or legal advice. Council tax rules and support schemes can vary between local authorities. If you are struggling with debt, we recommend speaking to a qualified debt adviser who can assess your individual circumstances.

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

Ready to Find Out if You Qualify for Help?

Use our Solution Finder for a free, no-obligation assessment. Our team can help you understand your options and take the first step towards a debt-free future.

Get Help Today